MUMBAI | BANGALORE: Property fund IL&FS Milestone Realty Advisors is in talks with global fundsBlackstone, Morgan Stanley and GIC to sell its entire stake in a Mumbai commercial project for about Rs1,000 crore, two persons familiar with the development said. 

"IL&FS Milestone has been in talks with prospective investors for the last few months and is expected to close this transaction soon," one of the persons said. "One of the funds that is in talks now was also an interested party back in 2010 when IL&FS Milestone acquired the stake." 

IL&FS Milestone, a joint venture between and IL&FS Investment Managers and Milestone Capital Advisors, had in June 2010 paid the HCC Group Rs575 crore for a 74% stake in 247 Park, an office property. The deal valued the property at Rs775 crore. 

HCC Real Estate, a subsidiary of the HCC Group, continues to hold the remaining stake in the 1.8-million sq ft commercial property in Vikhroli. 

While Blackstone, Morgan Stanley Real EstateInvestment and HCC declined comment, GIC and IL&FS Milestone Realty Advisors did not respond to ET's emailed query on the development. HCC, the other stakeholder, also refused to say if it has first right of refusal if IL&FS Milestone Realty decides to exit the project. 

The property, which has 1.2 million sq ft of leasable space in three 14-storey towers, is fully occupied.Siemens, Future Group, DHL Lemiur and HCC are among its prominent tenants. 

According to one of the persons quoted above, the special purpose vehicle that owns the asset has a debt obligation of about Rs300 crore, which will pass on to the prospective buyer as part of the deal. Of the 1.2-million-sq-ft space, over 0.9 million sq ft is dedicated to offices while the rest is for retail. 

The lease agreement for space in the property includes a clause that provides for rental escalation of about 15% every three years. 

Over the last few quarters, private equity players have become selective about investment in real estate. Private equity investment in the real estate sector almost halved in 2012, according to Venture Intelligence, a research service focused on private equity and M&As. During 2012, PE funds made 66 investments in the real estate segment, of which 57 had an announced value of $1.95 billion.

 

source: http://economictimes.indiatimes.com/markets/real-estate/news/ilfs-milestone-realty-in-talks-with-blackstone-morgan-stanley-to-sell-entire-stake-in-mumbai-project/articleshow/18583783.cms